FUNDAMENTALS OF
BUSINESS LAW, 10E
ROGER LEROY MILLER
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AGREEMENT IN TRADITIONAL
AND E-CONTRACTS
CHAPTER 9
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LEARNING OBJECTIVES
1. What elements are necessary for an
effective offer? What are some
examples of nonoffers?
2. In what circumstances will an offer
be irrevocable?
3. What are the elements that are
necessary for an effective
acceptance?
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LEARNING OBJECTIVES (CONT’D)
4. How do shrink-wrap and click-on
agreements differ from other
contracts? How have traditional laws
been applied to these agreements?
5. What is the Uniform Electronic
Transactions Act? What are some of
the major provisions of this act?
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INTRODUCTION
• In this chapter, we look closely at
agreement, one of the requirements
for a contract to be valid and
enforceable.
• Then we discuss online offers and
acceptances and examine some laws
that have been created to apply to
electronic contracts, or e-contracts.
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AGREEMENT
• Agreement
• Agreement means that the parties must
agree on the terms of the contract.
• Ordinarily, agreement is evidenced by two
events: an offer and an acceptance.
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AGREEMENT
• Requirements of the Offer
• The first requirement for an effective offer
must be a serious, objective intention by
the offeror to become bound by the offer.
• The concept of intention can be further
clarified through an examination of the
types of statements that are not offers.
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AGREEMENT
• Nonoffer situations include:
1. Expressions of opinion
2. Statements of future intent
3. Preliminary negotiations
4. Generally, advertisements, catalogues, price lists,
and circulars
5. Traditionally, agreements to agree in the future
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AGREEMENT
• The second requirement for an effective
offer involves definiteness of terms. The terms
of the offer must be sufficiently definite to be
ascertainable by the parties or by a court.
• Generally, a contract must include the following
terms, either expressed in the contract or capable
of being reasonably inferred from it:
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AGREEMENT
1. The identification of the parties
2. The identification of the object or subject
matter of the contract
3. The consideration to be paid
4. The time of payment, delivery, or
performance
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AGREEMENT
• The third requirement for an effective
offer is communication. The offer must
be communicated to the offeree.
• The communication of an effective offer
to an offeree gives the offeree the power
to transform the offer into a binding, legal
obligation (a contract) by an
acceptance.
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AGREEMENT
• Termination of the Offer
• An offer can be terminated by action of the
parties or operation of law. Three ways to
terminate an offer by action of the parties:
1.Revocation—Offerer withdraws the offer.
2.Rejection—Offeree rejects the offer by words or
by conduct.
3.Counteroffer—Offeree rejects the original offer
and makes a new offer.
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AGREEMENT
• Some offers can be irrevocable:
• Offeree changed position because of justifiable
reliance on the offer
• “Firm offers” made by merchants
• An option contract when an offeror promises to
hold an offer open for a specified period of time in
return for a payment given by the offeree, as in
sale or lease of real estate.
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AGREEMENT
• An offer can be terminated by the
operation of law through the following
events:
1. Lapse of time—The offer terminates at the
end of the time period specified in the offer
or at the end of a reasonable time period if
no time is specified.
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AGREEMENT
2. Destruction of the specific subject matter
of the offer
3. Death or incompetence of the offeror or
offeree
4. Illegality of the contract
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AGREEMENT
• Acceptance
• An acceptance is a voluntary act by the
offeree that shows assent, or agreement,
to the terms of an offer.
• Acceptance can be made only by the
offeree or the offeree’s agent.
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AGREEMENT
• Acceptance must be unequivocal. Under
the common law, if new terms or
conditions are added to the acceptance,
it will be considered a counteroffer.
• Acceptance of a unilateral offer is
effective on full performance of the
requested act. Generally, no
communication is necessary.
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AGREEMENT
• In a bilateral contract, in contrast,
communication of acceptance is
necessary, because acceptance is in
the form of a promise. The offeree can
communicate acceptance by any
authorized mode of communication.
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AGREEMENT AND E-CONTRACTS
• Online Offers
• Sellers doing business via the Internet can
protect themselves against contract
disputes and legal liability by creating
offers that clearly spell out the terms that
will govern their transactions if the offers
are accepted.
• All important terms should be easy to view.
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AGREEMENT AND E-CONTRACTS
• The offer should be displayed in an easily
readable format and should include a
mechanism, such as an “I agree” or “I
accept” box, by which the customer can
accept the offer.
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AGREEMENT AND E-CONTRACTS
• Jurisdictional issues frequently arise with
online transactions. The offer should
include dispute-settlement provisions.
• It should also include a forum-selection
clause, indicating the location for the
resolution of any dispute arising under the
contract.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a passwordprotected website for classroom use.
AGREEMENT AND E-CONTRACTS
• Online Acceptances
• Click-on agreement is created when a buyer
completes a transaction on a computer. She then
indicates her assent to be bound by the terms of
an offer by clicking on a box that says, for
example, “I agree.”
• The terms of the agreement may appear on the Web site through which
the buyer is obtaining goods or services, or they may appear on a
computer screen when software is downloaded.
• Enforceability—Courts enforce click-on agreements, holding that by
clicking on “I agree,” the offeree has accepted by conduct.
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AGREEMENT AND E-CONTRACTS
• Browse-wrap terms are terms that an Internet user
does not have to read
• Enforceability—may not be enforced on the ground that the user is not
made aware that he or she is entering into a contract.
• A shrink-wrap agreement has terms expressed
inside the box. The party who opens the box is
informed that, by keeping the goods, he or she
agrees to the terms of the shrink-wrap agreement.
• Enforceability—Courts have often enforced shrink-wrap agreements,
even if the purchaser-user of the goods did not read the terms of the
agreement.
• A court may deem a shrink-wrap agreement unenforceable if the buyer
learns of the shrink-wrap terms after the parties entering into the
agreement.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a passwordprotected website for classroom use.
AGREEMENT AND E-CONTRACTS
• E-Signatures
• An e-signature is “an electronic sound, symbol, or
process associated with a record and executed
by a person with the intent to sign the record.”
• With the Electronic Signatures in Global and
National Commerce Act (E-SIGN Act) of 2000 , no
contract, record, or signature may be “denied
legal effect” solely because it is in an electronic
form.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a passwordprotected website for classroom use.
AGREEMENT AND E-CONTRACTS
• Partnering Agreements
• Seller and buyer agree in advance on the terms
and conditions that will apply to all subsequent
transactions.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a passwordprotected website for classroom use.
THE UNIFORM ELECTRONIC
TRANSACTIONS ACT
• UETA was adopted by most states to create
rules to support enforcement of e-contracts.
• The Scope and Applicability of the
UETA
• Contracts entered into online, as well as
other documents, are presumed to be
valid.
• Does not apply to certain transactions
governed by the UCC or to wills or
testamentary trusts.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a passwordprotected website for classroom use.
THE UNIFORM ELECTRONIC
TRANSACTIONS ACT
• The Federal E-SIGN Act and the UETA
• Although most states have laws governing
e-signatures, these laws are not uniform.
• The UETA provides for the validity of esignatures and may ultimately create
more uniformity among the states in this
respect.
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THE UNIFORM ELECTRONIC
TRANSACTIONS ACT
• Highlights of the UETA
• Attribution
• Authorized signatures
• The effect of errors
• Timing
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EXHIBIT 9.1
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